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Thursday, April 24, 2003

VENEZUELA AFTER 4 YEARS OF THE CHAVEZ ADMINISTRATION. April 24, 2003

Chavez was sworn in office on February 1999. Thus he has finished a term by US standards. Several prime ministers and even presidents of the US have had books dedicated to them even though they did not reach 4 years in office or finish their first term. It is fair to evaluate Chavez tenure.

POLITICAL

Chavez was elected on a strong political platform. He sold the idea that a new constitution would solve many a Venezuelan problem. Indeed December 15 of 1999 he got his referendum approving the new constitution. This one allowed him in the following months to sweep away most of the institutions, and the people associated with him, as holdovers of the corrupt old system. This orgy of replacement was basically done by August 2000.

No doubt it was a very big political victory. Was it a “good” victory?

The constitution was written too fast, too extensively, and without good care of the transition period procedures while switching from one to the other. Today, many of the problems encountered by Chavez actually come from these gaps and loose ends. For example the problem in the redistribution of moneys between the central government and the local ones. For example the messy judicial system, near chaos and insignificance. And more damming, the realization that a lot of the social promises made in that constitution cannot be paid off. Not now, and possibly never. Yet, written in they are.

But for Chavez it reached his objectives, to destroy many of the normal barriers in a democracy that limit the excess of governments. Chavez does as he pleases, pretty much. In front of him there is only the press and media left, the opposition marching in the streets, and foreign opinion up to a point.

ECONOMICAL

This is very simple. The rate of exchange when Chavez took office was below 600 Bolivares for a dollar. Today, with a fixed exchange system, the Bolivar is fixed at 1610 for the dollar but on the black market it is around 2200. By any standard, trebling the value of the US dollar points to a mismanagement of the economy and the public administration.

Other indicators are as catastrophic. Real inflation through the 4 years is estimated around 100% and did not go any higher since the country has been in a semi constant recession through the four years. The best the government has to show for itself was 2001 with a meager 3% increase, bracketed by two years of production output decrease. 2002 numbers are not clear at this point but they seem to point to a 5-7% decrease.

Apparently of 10 able bodied Venezuelans in the work force, only 3 hold a steady job. 2 are plain jobless and 5 work in the informal sector or occasional jobs.

And I will not go into the destruction of the industrial network with continuous closings, the sacking of the oil workers, the emigration of educated elite, the pauperization of the University system, etc…

SOCIAL

There is of course no surprise here. A government that has worried only about politics and that run to the ground the economy can only expect to have a huge social crisis in its hands.

In real value the minimal wage is today 136 US dollars a month. Down from 225 a year ago. Higher wages and compensations of course are hit proportionately even more since many enterprises have not increased upper management wages in more than a year. Thus the purchasing power of the people has been dramatically cut. How do we see this?

If you walk Caracas streets, you will see more homeless and street children than ever. If you hold a business that still operates you will see long fired workers trying to get their job back and promising to behave. If you must resort to public health services, you will be asked to buy your own medicines, to bring food and linen if you need to be hospitalized. The hospital is willing to give you medicines, they just run out and the government is not providing enough. Tales of hungry children sent to schools do not make it anymore to the news.

Of course this gives rise to crime. El Universal reports in a graphic on Wednesday April 23 that 9620 people were murdered in Venezuela in 2002. That is right, 9620 people were murdered for robberies, gang fights for street controls, domestic violence and others. This is for a population of 23 million people. In 1998, the year that saw the election of Chavez the total murders were 4550. In 1999 this climbed to 8022, steadied at 7960 in 2001 and zoomed to 9620. Projections for 2003 are above 10,000 since the first quarter of 203 is already at 2720.

You need a sense of perspective? You have to wait for 1992 (3,366) to find a year with as many murders in total than for the first quarter only of 2003. To find such murder rates one would have to look at countries in the middle of a civil war, such as Colombia. How many people have been killed during the Iraq war?

Corruption is at an all time high, and immune from any type of prosecution it seems. This I write in the Social section instead on the Economy section. I think that the moral damage that the Chavez corruption has done to the Army and administration will have serious consequences at the social level. Proof of corruption? Well, the Chavez administration has received the largest amount of dollars that any previous administration has received. And left the worse economic crisis of our history. Where is the money?

CONCLUSION

The Chavez administration is turning out to be perhaps the worst one of the last century of our history. Clearly, with just what is written above a US president, heck!, any president would have a hard time to achieve re-election by fair ways. This explains perhaps the instability going on in Venezuela these days.

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